BUKIDNON DOCTORS’ HOSPITAL INC., petitioner, vs. METROPOLITAN
BANK & TRUST CO., respondent
G.R. No. 161882 | July 8, 2005
FACTS:
Sometime in 1995, petitioner Bukidnon Doctors’ Hospital,
Inc., obtained a loan of P25 million from respondent MetroBank to be used for
the construction of its hospital. To secure this loan, the petitioner mortgaged
6 parcels of land located in Valencia, Bukidnon, registered in the name of the
President and Administrator of petitioner hospital, Dr. Rene Sison and Rory P.
Roque. Upon petitioner’s default in the payment of the loan, the mortgage was extrajudicially
foreclosed and the mortgaged lots were sold in a public auction to respondent
bank. The petitioner failed to redeem the properties within the period of redemption.
Forthwith, the respondent consolidated its ownership over the properties and
was issued new certificates of title.
In a letter received by the respondent on 7 July 2001, the petitioner
expressed its desire to continue staying in the subject premises so that the
operation of the hospital erected thereon would not be disrupted. Petitioner
proposed to pay rent in the amount of P100,000 per month for a period of, but
not limited to, three years. The terms finally agreed upon by the parties were:
(1) a monthly rental of P150,000, and (2) the effectivity of the lease contract
in November 2001.
Approximately a year and eight months after the agreed
effectivity date of the lease contract, the respondent asked the petitioner to
vacate the leased premises within 15 days. The petitioner refused, invoking the
subsisting lease agreement.
On 21 August 2003, the respondent filed with the RTC of Malaybalay
City, Bukidnon, an Ex Parte Motion for a Writ of Possession.
On 17 November 2003, the trial court issued an order granting
respondent’s ex parte motion for a writ of possession.
On March 4, 2004, petitioner instituted the instant petition
for review on certiorari under Rule 45.
In its Comment, respondent asserts that as a purchaser in a
valid extrajudicial foreclosure sale under Act No. 3135 and as the absolute
owner of the subject parcels of land, it was entitled as a matter of right to
the issuance of a writ of possession. The subsequent “agreement to stay” between
the parties did not negate respondent’s right to take possession of the subject
properties through a writ of possession. In any event, the “agreement to stay”
on the subject properties was deemed to be on a month-to-month basis, since the
period therefor was not fixed.
The petitioner rebuts in its Reply that the trial court
clearly erred in granting respondent’s ex parte motion for a writ of possession
because of the existence of a lease agreement between the parties, which was
executed after the respondent consolidated its title to the subject properties.
ISSUE:
Whether a writ of possession is the proper remedy for
evicting a mortgagor who became a lessee of the mortgaged properties after the
mortgagee has consolidated ownership over the properties
RULING:
The law and jurisprudence are clear that in extrajudicial foreclosure
proceedings, an order for a writ of possession issues as a matter of course,
upon proper motion, after the expiration of the redemption period without the
mortgagor exercising the right of redemption, or even during the redemption
period provided a bond is posted to indemnify the debtor in case the
foreclosure sale is shown to have been conducted without complying with the requirements
of the law or without the debtor violating the mortgage contract. The rationale
for the ministerial issuance of a writ of possession is to put the foreclosure
buyer in possession of the property sold without delay, since the right to
possession is founded on ownership of the property.
However, in the instant case, a writ of possession was not
the correct remedy for the purpose of ousting the petitioner from the subject
premises. It must be noted that possession is the holding of a thing or the
enjoyment of a right. It is acquired by the material occupation of a thing or
the exercise of a right, or by the fact that a thing or right is subject to the
action of one’s will, or by the proper acts and legal formalities established
for acquiring such right. “By material occupation of a thing,” it is not
necessary that the person in possession should be the occupant of the property;
the occupancy can be held by another in his name.
In other words, an owner of a real estate has possession,
either when he himself is physically occupying the property, or when another person
who recognizes his rights as owner is occupying it.
In the case at bar, it is not disputed that after the
foreclosure of the property in question and the issuance of new certificates of
title in favor of the respondent, the petitioner and the respondent entered into
a contract of lease of the subject properties. This new contractual relation
presupposed that the petitioner recognized that possession of the properties
had been legally placed in the hands of the respondent, and that the latter had
taken such possession but delivered it to the former as lessee of the property.
By paying the monthly rentals, the petitioner also recognized the superior
right of the respondent to the possession of the property as owner thereof. And
by accepting the monthly rentals, the respondent enjoyed the fruits of its
possession over the subject property. Clearly, the respondent is in material
possession of the subject premises. Thus, the trial court’s issuance of a writ
of possession is not only superfluous, but improper under the law. Moreover, as
a lessee, the petitioner was a legitimate possessor of the subject properties
under Article 525 of the Civil Code. Thus, it could not be deprived of its lawful
possession by a mere ex parte motion for a writ of possession.
In a nutshell, where a lease agreement, whether express or implied,
is subsequently entered into by the mortgagor and the mortgagee after the
expiration of the redemption period and the consolidation of title in the name
of the latter, a case for ejectment or unlawful detainer, not a motion for a
writ of possession, is the proper remedy in order to evict from the questioned
premises a mortgagor-turned-lessee. The rationale for this rule is that a new
relationship between the parties has been created. What applies is no longer
the law on extrajudicial foreclosure, but the law on lease. And when an issue arises,
as in the case at bar, regarding the right of the lessee to continue occupying
the leased premises, the rights of the parties must be heard and resolved in a
case for ejectment or unlawful detainer under Rule 70 of the Rules of Court.
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